India creating new management thinking: Prahalad

Ahmedabad, Feb 26 (IANS) India is creating the next wave of management thinking with micro-level multinationals of the country making global operations possible without relying on foreign direct investment, noted management guru C.K. Prahalad has said. Delivering an address at the Ahmedabad Management Association (AMA) here Monday night, Prahalad said over the last five years the Indian MNCs engaged in IT, biotech, pharmaceuticals, auto and auto ancillary, jewellery and hospitality firms with annual sales of not more than $25 million have proved that they could operate successfully in the global arena by adopting the mergers and acquisition route.

“They have invented a new way of creating a global company. This is a huge innovation and for the first time India is making a difference in development economic thinking,” Prahalad noted.

For many years it has been the belief that foreign direct investment was necessary for firms to grow in size locally and then take to operating globally.

But the micro-level Indian MNCs have shown by leveraging the available financial resources both locally and globally they could create investment abroad.

“In order to globalise it is not enough to think local and act global or imitate the current practices of US, European or Japanese MNCs. There is need to think and act globally simultaneously.

“In other words, to become a multinational company one has to innovate and not imitate. The focus should be on globalising operations along with ensuring local responsiveness at the same time,” Prahalad said.

The efforts of Indian micro-level MNCs have thrown up new and clear patterns of investment abroad indicating that Indian entrepreneurial energy is building capacity in existing businesses and building geographical scope.

“They are developing business and integrating their operations seamlessly. They are prompting a different way of thinking about cost structures that are required to manage a global company,” he said.

Prahalad said what has emerged out of these firms’ experience is a new “Indian advantage”, which needs to be leveraged and sustained for ensuring further growth so that by 2015 Indian MNCs will have a prime position in the league of global MNCs.